Glossary

Consumer surplus: the unpaid value of purchases to consumers as measured by the area under the demand and above price.
Cross-price elasticity: where a percentage change in the price of product A causes a percentage change in the quantity of product B.
Elasticity: the percentage change in quantity brought about by a percentage change in price.
Income elasticity: the percentage change in quantity given a percentage change in income.
Marginal cost: the change in total cost given a change in quantity.
Marginal revenue: the change in total revenue given a change in quantity (equal price).
Market equilibrium: the point where marginal cost equals marginal revenue or supply equals demand. This point is stable if prices are allowed to fluctuate.
Price elasticity of demand: the percentage change in quantity demanded divided by the percentage change in a good’s own price.
Price elasticity of supply: the percentage change in quantity supplied divided by the percentage change in a good’s own price.
Primary good: a raw material.
Producer surplus: the value that accrues to the producer above the cost. It can be calculated as Total revenue minus total cost. It is known as profit or rent.
Rent: the normal profits accruing to a producer.
Secondary good: a partially finished good moving through the supply chain.
Supply chain: the sequence of processes involved in the production and distribution of a good.
Tertiary good: a final or finished good.
Total cost: the total cost of production (variable cost plus fixed cost).
Total revenue: price multiplied by quantity.
Total value: total revenue plus consumer surplus.
Value-added: the financial value associated with a product as it is processed and becomes more finished, and therefore more valuable to the final user.
Willingness to pay: the amount a consumer is willing to pay for a product. Sometimes the demand curve is referred to as the willingness to pay curve.
Unitary elastic: the point on a curve where a 1% change in price results in a 1% change in quantity supplied or demanded thereby having zero effect on a change in revenue.

References

Parnel, E. (2016). Organic food: Protects your body, not your portfolio. Seeking Alpha. Retrieved from: http://seekingalpha.com/article/3896266-organic-food-protects-body-portfolio

Wozniacka, G. (2013, January 12). With almonds’ rising revenues, land values soar. U.S. News. Retrieved from: http://www.usnews.com/news/us/articles/2013/01/12/with-almonds-rising-revenues-land-values-soar